People are obsessed by start-up failure statistics, but growing a business carries some substantial risks. These are related to areas such as cashflow, funding, people issues and competition. This guide gives you an overview of specific risks you'll encounter when growing your business and how to manage them.
Every business has a different risk profile, but there are certain risks that all businesses could be exposed to. Financial risk includes the way you finance your business, cashflow and the credit terms you offer. Strategic risk include looking at the industry you are in and assessing factors such as the competition. Compliance risk relates to the introduction of new legislation that could affect your employees and operational risks need to be considered in the event of the theft or breakdown of any equipment, for example.
Evaluating risks will help you to determine their significance to your business as well as enabling you do develop ways of preventing or minimising their impact. There are several ways to do this: assess your business plan and consider how likely the risk will be and what effect it is likely to have. Rate the risks on a scale of one to ten so you can see them in relation to each other as well as identify those that are more significant than others.
Once you've identified the risks in your business, you can choose to minimise them, eliminate them altogether by introducing safety measures for example, or transfer them through insurance. It's important to bear in mind that risk management is a long-term process - monitoring and evaluating risks needs to be carried out on a regular basis to ensure that the right procedures to deal with risks have been put into place.
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